'The system is rigged': Founders and VCs weigh in on the UK's ambition deficit

Young Brits are catching flak for their evident deficiency of entrepreneurial drive, sparking a broader statement connected whether the U.K. startup country is facing an ambition deficit.

It started erstwhile U.K. Business Secretary Peter Kyle criticized British assemblage students for lacking the aforesaid involvement successful starting a concern arsenic their American peers.

"In Britain, if you went to a radical of undergraduates, however large would that radical person to beryllium earlier you recovered idiosyncratic that said their prime of going to university…was due to the fact that they wanted to go a founder?" Kyle said astatine an lawsuit hosted by AI chipmaker Nvidia successful London.

"The entrepreneurialism simply isn't determination – the drive, the vigour."

He's not alone; the tech and startup country successful the U.K. is often viewed arsenic lacking the aforesaid strength and velocity arsenic its counterparts successful the U.S. and China.

It's led immoderate task capitalists to suggest that European founders request to enactment harder and follow the rigorous "996" enactment docket — 9 a.m. to 9 p.m. six days a week — infamous astatine China's tech companies.

The stereotypes are not needfully backed up by the data, however. Almost 60% of young British radical were funny successful starting their ain business, according to a recent study conducted by the Federation of Small Businesses (FSB) and Simply Business of 2,079 radical betwixt the ages of 18 and 34 successful the U.K.

However, lone 16% of them really took the leap into entrepreneurship, with astir citing a deficiency of ceremonial concern acquisition arsenic holding them back.

"There's decidedly a ample appetite to research entrepreneurship from a precise young age," Dama Sathianathan, elder spouse astatine Bethnal Green Ventures, told CNBC Make It.

"It's conscionable getting truly hard to amusement ambition erstwhile the strategy is rigged against you … You don't person the close supportive infrastructure to beryllium capable to pat into money, to truly person the thrust to purpose high."

Bristol-based entrepreneur Tom Wallace-Smith made Forbes 30 nether 30 successful Europe past twelvemonth — but helium said entrepreneurship feels retired of scope to astir radical successful the U.K.

"From people's nationalist perceptions, the full way of Elon Musk oregon Jeff Bezos oregon Mark Zuckerberg feels rather mythological to people, it's wholly retired of someone's reach," Wallace said successful an interrogation with CNBC Make It.

Wallace, who co-founded atomic fusion startup Astral Systems successful 2021 portion finishing a PhD successful atomic physics astatine the University of Bristol, said helium initially didn't cognize that entrepreneurship was a viable vocation path, and expected to extremity up successful a large institution oregon go an academic.

He argued that the U.K. has nary shortage of palmy entrepreneurs, but the authorities and media "could bash a amended occupation of telling founders' stories" and expanding vulnerability to startup environments.

A batch of radical successful the U.K. spot entrepreneurship represented via comedic world TV shows similar The Apprentice oregon Dragons' Den, Wallace-Smith said, and are lacking relation models. "It's much astir making amusive of them alternatively than championing them."  

The FSB and Simply Business survey recovered that 15% of young existent oregon aspiring entrepreneurs said that seeing others win would boost their confidence, but implicit a 3rd hadn't recieved immoderate guidance oregon enactment from section entrepreneurs oregon businesses.

Harry Stebbings, task capitalist and laminitis of the 20VC podcast, puts immoderate of the blasted astatine the doorway of "risk-off" British parents, with the instability surrounding entrepreneurship making it an unattractive vocation path.

Instead, Stebbings — who's a champion of the 996 enactment week — said young radical look to aspire to enactment astatine firm firms similar Goldman Sachs, and McKinsey.

Astral System's Wallace-Smith said galore U.K. entrepreneurs aren't seeing capable "direct incentive" to standard and turn successful the U.K. arsenic opposed to the U.S. — indicating that it's mostly a structural contented that's fueling the entrepreneurship deficit.

"The ones that are near successful the U.K. are present with gritted teeth, similar by hook oregon by crook, to marque definite that we person occurrence successful the U.K. due to the fact that I conscionable attraction astir the state and I privation to spot this win here… It's much of an outlier than the standard," helium said.

Atomico's State of European Tech 2024 identified a endowment leakage to the U.S., with astatine slightest 800 companies that could person been founded successful Europe alternatively being established crossed the Atlantic.

It besides recovered that established startups trying to standard up past the effect backing signifier thin to conflict to unafraid investment. In fact, doubly arsenic galore U.S. companies — 8.3% — rise rounds of $15 cardinal oregon more, compared with Europe's 4.1%.

Additionally, fractional of European companies person tuned to the U.S. to unafraid a pb capitalist since 2015, according to the report.

Although hazard appetite continues to beryllium among British entrepreneurs, it doesn't for investors, Sathianathan said, noting that VCs successful the U.K. don't privation to hazard their money.

Damian Routley, a main operating serviceman astatine task workplace and startup accelerator Founders Factory, said the fiscal incentives for founding a institution arsenic a young idiosyncratic are "increasingly weak." with taxation reliefs for some entrepreneurs and investors diminishing since the Covid-19 pandemic successful 2020.

The beingness allowance for Business Asset Disposal Relief (BADR) has been slashed from £10 cardinal ($13.45 million) to £1 million, portion Capital Gains Tax (CGT) rates person risen, leaving founders with smaller payouts erstwhile they merchantability their companies.

"This each means it's harder to instrumentality the plunge and motorboat a concern than to spell for the information of a PAYE [Pay As You Earn] grad job," helium told CNBC Make It.

Meanwhile, immoderate early-stage backing incentives are considered generous, but are focused connected investors, leaving galore startups struggling to unafraid the superior they request to grow.

"It's a structural issue, which past seeps into it becoming a taste issue, due to the fact that if you're faced with continuously having to struggle, wherefore would you take to conflict connected this entrepreneur path?" Sathianathan added.

It's not each doom and gloom, though, arsenic the U.K. remains "Europe's premier startup hub," Routley said.

In 2024, £9 cardinal was invested into venture-backed businesses successful the U.K., maintaining the country's presumption arsenic the third-largest VC marketplace down the U.S. and China, according to the British Private Equity & Venture Capital Association's Venture Capital successful the UK 2025 report.

Various incubators and accelerators person besides been acceptable up to promote young radical to spell into business. Alongside Founders Factory, others see SETsquared, UCL's Hatchery, and Techstars.

Additionally, 20VC's Stebbings precocious launched Europe's equivalent of the Thiel Fellowship — a programme which gives $200,000 to young radical nether the property of 22 who privation to physique innovative startups. Alumnis of the U.S. programme see billionaire Lucy Guo to Ethereum co-founder Vitalik Buterin.

Stebbing's Project Europe, backed by 128 antithetic founders from firms including Klarna, Mistral and Soundcloud, is simply a money which volition grant 200,000 euros ($234,684) to prime founders who are 25 years aged oregon younger.

However, the U.K.'s House of Lords' Communications and Digital Committee warned earlier this twelvemonth that the U.K. is astatine hazard of becoming an "incubator economy" — arsenic ideation remains strong, but the quality to standard and turn remains weak.

"If we can't lick our pathways to superior markets and incentivise sovereign IP [intellectual property] to enactment here, past we hazard losing our champion companies to amended structured regimes with greater liquidity potential," Routley said. "The ambition is there, but the ladder is missing a fewer rungs."